In a significant change for dental service organizations (DSOs), investors, and dental practices operating in North Carolina, the North Carolina General Assembly has eliminated the long-standing requirement that dental practice management agreements be reviewed and approved by the North Carolina State Board of Dental Examiners (NCSBDE) before becoming effective.

Section 38A.2 of Session Law 2026‑41, enacted on July 7, 2026, removes the NCSBDE’s authority to require pre‑approval, compliance determinations, or advance review of dental management arrangements.

Background

For many years, North Carolina was one of the few states requiring management agreements between dental practices and DSOs to undergo advance review by a state dental board. In practice, parties were often required to submit management agreements and certain amendments and ownership updates to the NCSBDE as part of a regulatory approval process before implementing the arrangement.

That review process frequently affected transaction timelines, increased costs, and created uncertainty for dental practices, management companies, and investors seeking to structure compliant DSO arrangements in North Carolina.

What Has Changed?

Section 38A.2 provides that a dental management arrangement may be entered into and maintained without obtaining the approval of the NCSBDE.

As a result, parties are no longer required to wait for NCSBDE approval before executing a management agreement or implementing operational arrangements between a dental practice and its management company.

What Has Not Changed?

While the legislation removes the front‑end approval requirement, it does not eliminate compliance obligations applicable to dental management arrangements.

The NCSBDE retains authority to investigate complaints, review management agreements during an enforcement proceeding, and take action for violations of the North Carolina Dental Practice Act.

In addition, management arrangements must continue to be documented in a written agreement that:

• Is signed by the parties.
   
• Sets forth the material terms of the arrangement.
   
• Describes the services to be provided and applicable time periods.
   
• Specifies the compensation payable or a methodology for determining compensation.

The legislation also does not alter existing restrictions relating to the corporate practice of dentistry or the requirement that licensed dentists maintain control over clinical decision‑making and the practice of dentistry. Parties should continue to structure arrangements carefully to ensure compliance with applicable law.

Practical Implications

The repeal of the pre‑approval requirement is expected to have several practical effects:

• Faster Transaction Execution: Acquisitions, affiliations, de novo formations, and restructuring transactions involving dental practices can proceed without waiting for NCSBDE review and approval, reducing closing risk and shortening deal timelines.
   
• Continued Compliance Risk: Although parties no longer face pre-transaction review, the NCSBDE retains authority to review arrangements after execution in connection with investigations or complaints. Consequently, management agreements should continue to be drafted with careful attention to fee structures, allocation of authority, and compliance generally with North Carolina’s corporate practice restrictions.
   
• Rulemaking and Implementation Should Be Monitored: The NCSBDE is directed to update existing rules to account for the repeal of the requirement that management arrangements be reviewed by the NCSBDE. Interested parties should monitor any proposed rulemaking, public comment opportunities, and conforming guidance to confirm that implementation of the statute does not introduce new procedural requirements or interpretive positions affecting management arrangements.

Takeaways

Section 38A.2 represents a meaningful shift in North Carolina's regulation of dental management arrangements. By eliminating the requirement for advance NCSBDE review and approval, the General Assembly has streamlined the process for establishing and modifying DSO relationships while preserving the NCSBDE’s enforcement authority.

Dental practices, DSOs, investors, and lenders should review existing transaction processes and form agreements to confirm compliance and determine whether any approval‑related provisions or timing assumptions should be revised in light of this change.

Parties should also monitor the NCSBDE’s rulemaking and implementation activity, including any conforming amendments to existing rules, forms, or guidance addressing dental management arrangements.

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